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Retirement Planning

I have been reading several articles and listening to many audio books on retirement planning lately. According to studies, not planning for retirement is one of the biggest regrets that people have when they reach old age. Falling short on retirement happens for many reasons; whether it is choosing to save for your kids' college education first, not having an emergency fund which means having to dip into retirement for unexpected expenses, or not realizing the importance of starting early.

In the book "The Money Class" by Suze Orman she talks about how for higher education there are loans and scholarships that your child can get to help pay for the cost of college, but there isn't anything similar for retirement, which is why retirement planning must come first. There are so many different ways to save for retirement, and if you have a small business, there are even more options available to you and your employees. It is extremely helpful for small business owners to talk with knowledgeable CPAs and financial planners about what options are best suited for them, their business and their employees.

Some of the most popular plans used by small businesses include; SEP (simplified employee pension), SIMPLE (savings incentive match plan for employers), 401k plans, solo 401k and IRAs. For the more "advanced" business owners, there are defined benefit plans, defined contribution plans and an ESOP (employee stock option plan) which is also a type of defined contribution plan.

The steps to establish the above-listed plans range from super easy to complex, and the plan management for each plan also differs. When picking a retirement plan, you need to make sure that the fees and administrative costs make sense for you and your business.



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